Freddie Mac reported a narrower $2.5 billion third-quarter loss, the smallest shortfall in more than a year amid signs that mortgage delinquencies are slowing. But the company warned that delays in the foreclosure process could raise costs “significantly” and that losses also could rise amid a faltering housing recovery.
The third-quarter loss compared with a year-earlier net loss of $5.4 billion. While gains in the value of certain securities and derivatives left Freddie with a small cash surplus at the end of the quarter, it was forced to ask the Treasury for $100 million, in part to cover the cost of $1.6 billion in interest payments made to the government.
The government took over Freddie and its larger sibling, Fannie Mae, two years ago through a legal process known as conservatorship, and the taxpayer tab for the firms stands at about $134 billion.
While there were signs that mortgage delinquencies eased at Freddie during the third quarter, the company warned that any improvements could be offset by a worsening outlook for losses on homes that go into foreclosure.
Full story: Freddie Mac Reports $2.5 Billion Loss – WSJ.com